Capacity management might bring some significant disturbances in 2012, as carriers absorb large new build vessels which not only affect transportation rates, but also generate overspill effects on their routes. In 2010 and 2011, the general growth of slow steaming came along with the capacity increases, making room for new ships delivered while diminishing the impact of new capacity. Now that all routes have been converted, new ships create imbalances between supply and demand, bringing rates down and hurting carriers on each new delivery.
Overcapacity has not plagued all routes evenly. Although major routes have seen sizeable increases in capacity, others are still managed tightly to keep rates afloat. The cascading of ships displaced by larger units will eventually be felt across the networks, spreading overcapacity into secondary trade lanes. We can only hope the economic recovery will firm up in 2012, and a return to healthy growth rates will help carriers face this difficult equation.
A major event for the trans-Atlantic market in 2012 may be the inking of a free trade deal between Canada and Europe. Shadowed by the eurozone debt crisis, negotiations are nonetheless progressing, and we can hope for a positive outcome this year.
This agreement, coupled with fiscal policy action and the lifting of tariffs on industrial inputs, will create a favorable environment for producers and further raise the status of Canada as a trading nation. This should stimulate economic growth for our country as our trading partners solve their respective debt issues, and positively impact traffic, both on the import and on the export fronts.